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Citigroup plunges on uncertainty | Citigroup plunges on uncertainty |
(about 4 hours later) | |
Shares in Citigroup, one of the biggest banks in the US, plunged on Friday amid uncertainty about the firm's future. | |
The firm's stock rose in early trade but later tumbled 28% as investors awaited the outcome of a meeting of the firm's board members. | |
The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm. | The Wall Street Journal reported that Citigroup was considering selling parts of the firm. There are also rumours it might merge with another firm. |
Earlier in the week the firm announced 52,000 job losses worldwide. | Earlier in the week the firm announced 52,000 job losses worldwide. |
These cuts came on top of previously announced reductions of 23,000 positions. | These cuts came on top of previously announced reductions of 23,000 positions. |
The total 75,000 job cuts represent a cut of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term". | The total 75,000 job cuts represent a cut of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term". |
Bank's future | Bank's future |
Chief executive Vikram Pundit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees. | Chief executive Vikram Pundit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees. |
Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January. | Shares in the firm have fallen sharply since the start of the year and are trading more than 80% down since January. |
Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves. | Saudi Prince Al-Waleed Bin Talal's decision to buy about $350m (£236m) of its shares on Thursday did not calm investors' nerves. |
The firm insisted on Thursday that it had "very strong capital and liquidity position and a unique global franchise". | The firm insisted on Thursday that it had "very strong capital and liquidity position and a unique global franchise". |
But Mr Pandit has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis. | But Mr Pandit has come under increasing pressure from critics who doubt his ability to turn around the company and survive the financial crisis. |
'Bloodletting' | 'Bloodletting' |
Citigroup has lost more than $20bn in the past year because of the global financial crisis. | Citigroup has lost more than $20bn in the past year because of the global financial crisis. |
The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010. | The bank has reported four straight quarterly losses and some analysts believe the bank will not return to profitability until 2010. |
Investors are worried that further losses could threaten the bank's future. | Investors are worried that further losses could threaten the bank's future. |
"Its fear and panic at this point, " said Gerard Cassidy, a banking analyst at RBC Capital. | "Its fear and panic at this point, " said Gerard Cassidy, a banking analyst at RBC Capital. |
Despite the sweeping job losses, the bank has maintained that its underlying business "remains strong and revenues have been stable". | Despite the sweeping job losses, the bank has maintained that its underlying business "remains strong and revenues have been stable". |
But Jason Goldberg, a Barclays Capital analyst said: "We worry if the lack of investor confidence leads to a lack of customer confidence. | But Jason Goldberg, a Barclays Capital analyst said: "We worry if the lack of investor confidence leads to a lack of customer confidence. |
Citigroup is one of nine financial institutions receiving funds from the US government's bail-out programme. | Citigroup is one of nine financial institutions receiving funds from the US government's bail-out programme. |